Comcast, Disney Team on Net Services

It seems Disney's desire for any potential profits derived from the Internet overrides holding a grudge against cable telecommunications company Comcast: Less than three months after a failed takeover bid by Comcast, the companies have agreed to offer news and children's entertainment programming from Disney through Comcast's high-speed Internet service.

Comcast, the largest cable company in the United States, will offer the programming to its 21 million cable subscribers and its 5.7 million broadband subscribers, the companies say in a statement.

The companies did not disclose financial terms of the deal, though sources said the agreement is for five years. Representatives from Comcast and Disney could not immediately be reached for comment.

Channel Choices

Comcast.net's Internet News Channel is currently using content from Disney's ABC News, including ABC News Live. That channel launched with the deal announcement Wednesday and provides live breaking news events, hourly news briefs, and reports from ABC News correspondents specifically designed for broadband customers.

ABC News already has deals with other DSL providers in the United States, including America Online and the SBC Yahoo DSL service from Yahoo and SBC Communications. It reaches about 35 million dial-up and broadband Internet users, according to Julie Summersgill, an ABC News spokesperson. ABC News will not provide any exclusive content to Comcast, says Summersgill, who also confirms the deal is a "multiyear" agreement.

Later in the year, Comcast plans to launch an online Kids Channel, which will provide Disney Connection, comprising broadband content aimed at children between the ages of 3 and 11. Disney content will include children's games, activities, and video shorts for the broadband service.

When Comcast originally attempted to buy Disney in February, it pointed to its desire for content as one of the primary reasons behind the acquisition move. Comcast has been facing stiff competition from companies offering DSL service and sees content as one of the best ways to woo customers to its cable broadband services.

Before Disney's board of directors rejected Comcast's unsolicited acquisition bid, Brian Roberts, Comcast president and chief executive officer, said in a speech that he saw Disney's brands, particularly its ESPN sports network, as ripe for extensive marketing and cross-promotion with existing Comcast networks and other properties.

Other Deals

Though no agreement between Comcast and Disney regarding ESPN was announced on Wednesday, Comcast is dipping its finger into other content pies. It announced a deal with Liberty Media that gives Comcast access to Liberty content and resolves pending litigation between the companies.

In May, it also cut a deal with Microsoft to give the software giant some new access to TV. Comcast has adopted Microsoft TV Foundation Edition 1.7 software for as many as 5 million subscribers, and perhaps more at a later time. Foundation Edition 1.7 lets cable companies and some other TV providers offer an interactive programming guide, navigation tools, and advanced features for capturing programs on digital video recorders.

As part of the Liberty agreement, Comcast will acquire the stock rights to Liberty Media subsidiary Encore ICCP in exchange for Liberty Media redeeming 120.3 million shares of its common stock held by Comcast.

Comcast will gain International Channel Networks; Encore ICCP's 10 percent ownership interest in E! Entertainment Television (of which Comcast is already the majority owner); Liberty Media's rights under a TCI Music contribution agreement; and approximately $545 million in cash, the companies say in a separate statement.

That deal, which requires standard regulatory and board approvals, also ends litigation pending between Comcast and Liberty Media regarding the TCI Music contribution agreement, which Comcast inherited as part of its acquisition of AT&T Broadband in November 2002, the companies say.